Boston Scientific plans $1.1B debt sale to shake off Guidant hangover

Don Seiffert^[1]

Associate Editor MHT- Boston Business Journal

This email address is being protected from spambots. You need JavaScript enabled to view it.^[2]

Boston Scientific, which has struggled beneath a heavy debt load stemming from its 2006 acquisition of Guidant^[3] Corp., announced plans Friday to raise approximately $1.05 billion in bond proceeds as part of a broader plan to restructure its balance sheet.

The Natick, Mass.-based medical device company said Friday it will issue the new notes in two tranches — a $600 million offering due in 2018 and a $450 million offering that matures in 2023. The company plans to use proceeds from the sale to retire existing long-term debt, much of which stems from the Guidant deal.

Industry analysts have consistently cited the debt from Boston Scientific’s $27 billion acquisition of Guidant as a primary reason for its sluggish growth and depressed stock price, which is now around $11.30 share versus over $40 prior to the deal.

For example, Morningstar analyst Debbie Wang^[4] recently wrote that, “Thanks to the unwieldy integration of Guidant ... and a sizable debt load, Boston Scientific was unable to spur internal innovation and found itself financially constrained when competing for acquisitions (in the past four years).”

Last year The Wall Street Journal argued that Boston Sci overpaid for Guidant.^[5]

In the fiscal quarter that ended in June, Boston Scientific reported revenue of $1.81 billion, which was ahead of its own guidance as well as analyst expectations. The company expects to generate between $7.05 billion and $7.17 billion in revenue this year.

References

1. ^{^} Don Seiffert (feeds.bizjournals.com)
2. ^{^} This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
3. ^{^} Guidant (www.bizjournals.com)
4. ^{^} Debbie Wang (feeds.bizjournals.com)
5. ^{^} Boston Sci overpaid for Guidant. (www.bizjournals.com)